March 2025 | Theme of the Month

Water Treatment Chemicals

Fabio Ranghino Federica Mallone Alice Massimiani

Fabio Ranghino

Federica Mallone

Alice Massimiani

Download PDF

Environmental issue

Water is a fundamental resource for life, ecosystems, and economic development. Yet it is increasingly under threat from three interconnected, human-driven crises: climate change, water scarcity, and declining water quality. These challenges further intensify the planet’s already limited supply of accessible, clean freshwater. Although water covers about 70% of the Earth’s surface, only 0.01% is available annually for human use.

Climate change directly affects both the accessibility and quality of water. Data clearly show that rising global temperatures have accelerated the frequency and severity of natural disasters, disrupted precipitation patterns, and increased the occurrence of both droughts and floods over the past three decades¹.

Although water covers about 70% of the Earth’s surface, only 0.01% is available annually for human use.

In parallel, human use of water adds significant stress to water availability. We are currently consuming 10% more than what is considered a sustainable threshold, and estimates point to a 40% gap between water demand and sustainable supply by 2030². Water withdrawal is expected to increase by 50%, reaching 6,900 billion m³ by 2030 (40% more than the sustainable threshold), primarily driven by population growth and rising GDP – assuming no improvements in water productivity. This outlook is expected to become even more concerning.

Water quality is equally at risk. Industrial discharge, agricultural runoff, and urban wastewater are continuously polluting rivers, lakes, and groundwater systems. Recent research shows that nearly half of the water affected by human activities is released polluted into the environment – without undergoing any treatment³.

This is a major problem, even in developed countries, where water pollution has been a persistent challenge since after the post-World War II era. Despite substantial regulatory efforts—such as the European Union’s Drinking Water Directive, first introduced in 1980—numerous water bodies still face significant pollution. Today, even in Europe, 60% of surface water bodies fail to meet chemical quality standards⁴ (Fig.1). Micropollutants—such as pharmaceuticals, pesticides, heavy metals, and PFAS⁵—are particularly concerning, as they persist in the environment and are resistant to conventional treatment methods. These pollutants pose direct risks to human health and severely impact ecosystem services that are essential for life, such as the provision of food and clean water. This, in turn, threatens industries that rely on these services. Alarmingly, nature loss is considered as one of the top risks humans will face over the next decade, as approximately half of global GDP is dependent on nature to some extent.

Environmental solutions

Over the past decades, both public and private sectors have invested significantly in water treatment infrastructure, driven by economic, regulatory, and consumer pressures. Water treatment plays a critical dual role: purifying contaminated water before use and treating wastewater after use. As a result, the water treatment industry has grown into a market valued at approximately $300 billion today and is projected to expand further at a compound annual growth rate (CAGR) of around 7% through 2030.

This sector encompasses a range of business models, including engineering, equipment manufacturing, service provision, and consumables, serving residential, commercial, industrial, and public markets. However, despite this growth, nearly half of global wastewater is still discharged untreated into the environment. Expanding water treatment infrastructure remains a top priority to reduce pollutant release. In addition, recent underscores the urgent need for advanced treatment technologies capable of removing micropollutants, which often escape conventional treatment processes⁶.

The water treatment industry has grown into a market valued at approximately $300 billion.

Wastewater treatment plants rely heavily on a variety of chemicals to function effectively. These chemicals are essential not only for enhancing the performance of purification processes but also for extending the lifespan of the treatment infrastructure, which is often placed under significant stress during operation. Used as critical consumables, these substances either improve cleaning efficiency or protect plant components from damage.

As a result, water treatment chemicals play a vital role throughout nearly all stages of the treatment cycle, supporting both conventional and advanced processes (Fig. 2). Key examples include:

Coagulants and flocculants, which help remove suspended solids and organic matter,
Disinfectants and biocides, used to eliminate pathogens from drinking water and wastewater,
Activated carbon, effective in capturing small and micropollutants,
Anti-scalants and corrosion inhibitors, which protect metal surfaces from scaling and corrosion caused by prolonged contact with water.

Although many core chemistries used in water treatment are well established, their effective application requires technical expertise and process customization. Industries such as Food & Beverage and Pharmaceuticals, for instance, demand extremely high purity in input water while simultaneously generating heavily contaminated wastewater that must be carefully treated before discharge (Fig. 3). Even within the same industry, water treatment requirements—and the associated chemical solutions—can vary significantly from case to case.

Water treatment chemicals play a vital role throughout nearly all stages of the treatment cycle.

Coagulants and flocculants are fundamental commodity chemicals, commonly used in the initial stages of treatment to remove suspended solids and organic matter. In contrast, functional chemicals—such as corrosion and scale inhibitors, as well as disinfectants—are higher-value products due to their complexity and their critical role in system performance, regulatory compliance, and asset protection. Activated carbon also remains essential in advanced treatment stages, particularly for the removal of micropollutants.

Solutions designed for advanced or highly sensitive applications—where reliability and water quality are non-negotiable—typically command premium price points.

From a sustainability perspective, certain chemical families remain controversial due to their negative environmental impacts. For example, chlorine-based treatments can increase toxic loads in water, while fossil-derived activated carbon contributes to resource depletion. As a result, their use requires careful assessment and consideration. Conversely, bio-based and biodegradable alternatives present more environmentally friendly options. These solutions are increasingly gaining traction, driven by both regulatory pressure and growing consumer demand for sustainable practices.

Investment opportunities

The global market for water treatment chemicals is accelerating, with expected CAGR of about +7% in the coming years, aligned with the broader water treatment sector. Currently valued at 55 $ billion, it is a highly fragmented and dynamic ecosystem, which presents several attractive features for investors. Shifting dynamics within the value chain create attractive integration opportunities. The most compelling segments are water specialty chemicals and activated carbon businesses. Manufacturers able to offer a specialised portfolio of functional or specialty chemicals have a competitive advantage over generalist blenders or distributors. Since chemical formulations must be precisely tailored to each industry and specific application (as previously discussed), the quality of customer service becomes a critical success factor. In this context, in a market where proximity to clients is highly valued, players that benefit from a track record of product reliability and technical expertise in specific verticals are favoured over competitors. Bundling multiple services—such as water testing, chemical formulation consulting, and chemical supply—into a single package is seen as a competitive moat, especially since charging standalone fees is often considered unfeasible.

The global market for water treatment chemicals is currently values at $55 billion.

In public markets, Ecolab emerges as the most vertically integrated player, with capabilities spanning both equipment and chemicals. Other listed leaders in the space, such as Kurita Water Industries and Kemira Oyj have a strong focus on water treatment chemicals which could be a plus vs more generalist players active across a broader set of markets. These firms benefit from scale efficiencies and long-term customer contracts, but may lose ground to agile mid-sized players better positioned for innovation and regional intimacy.

Sources

^{1. IPCC AR5 Climate Change 2013: The Physical Science Basis}^{2. UNIDO Water stewardship}^{3. Jones, E. R., Van Vliet, M. T., Qadir, M., & Bierkens, M. F. (2021). Country-level and gridded estimates of wastewater production, collection, treatment and reuse. Earth System Science Data, 13(2), 237-254.}^{4. PFAS (per- and polyfluoroalkyl substances) are a group of fluorine-based chemicals used for their resistance to water, oil, and heat in various consumer and industrial products (e.g. detergents, fire retardants ). They were named “forever chemicals” as they do not biodegrade easily and cause bio-accumulation in the environment.}^{5. Chemical status of surface waters is assessed against assessed against a list of 33 “priority substances” and groups of substances that pose a significant risk to, or via, the aquatic environment. Concentrations are compared to Environmental Quality Standards (EQS).}^{6. European Commission, Impact Assessment Accompanying the document Proposal for a Directive of the European Parliament and of the Council concerning urban wastewater treatment (UWWTD)}

Important information

This material is of a promotional nature and is provided for information purposes only. Please note that this material may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. This document is issued by Ambienta SGR S.p.A. It is not intended for solicitation or for an offer to buy or sell any financial instrument, distribution, publication, or use in any jurisdiction where such solicitation, offer, distribution, publication or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document.

Nothing in this document constitutes legal, accounting or tax advice. The information and analysis contained herein are based on sources considered reliable. Ambienta SGR S.p.A uses its best effort to ensure the timeliness, accuracy, and comprehensiveness of the information contained in this marketing communication. Nevertheless, all information and opinions as well as calculations indicated herein may change without notice.

Ambienta SGR S.p.A. has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the Prospectus and relevant offering documents. Any decision to invest must be based solely on the information contained in the Prospectus and the offering documentation. We strongly recommend that you seek independent professional advice prior to investing.